There are awards of all sorts for products and marketing, but Contessa Premium Foods made the news this week because its rescue from bankruptcy last year won a Transaction of the Year award from the Turnaround Management Association.
Contessa was a leading importer, manufacturer, exporter, and distributor of premium farm-raised shrimp, convenience meals, stir-fry vegetables, and other frozen food products worldwide. But due to the recession and increasing competition, it suffered an increasingly sharp decline in demand for its premium, branded products and subsequently filed for bankruptcy in January 2011.
Kelly Drye & Warren was retained as restructuring counsel and Scouler & Company served as Contessa's financial advisors. Arent Fox was selected as counsel to the official Committee of unsecured creditors and FTI Consulting acted as the Committees financial advisor. But the process got off to a rough start because the Committee didn't trust the company's management and wanted to sue the insiders. Other stakeholders, including a key
creditor group, were likewise hostile and the case quickly threatened to spin out of control at a time the company was trying to stabilize its business operations.
Yet the professionals quickly recognized that a sale of Contessa's assets under Section 363 of the Bankruptcy Code represented the best option to preserve its core businesses and its employees, and the first of several necessary steps to maximize recoveries for its creditors. Scouler identified a
serious liquidity crisis and took steps to control and manage cash, and focus on Contessa's profitable business lines. Kelley Drye then worked with Arent Fox to quickly develop a collaborative process to manage the diverse group of interested stakeholders in the case.
They conducted regularly calls between Contessa and the Committee, and periodically the key creditor group. By choosing open communication over brinkmanship, Kelley Drye and Arent Fox enabled the factions to work together and focus on preserving going-concern value and jobs over litigation. The sale of Contessa to potential buyers involved Scouler and investment bank Imperial Capital in two distinct yet symbiotic marketing
campaigns, which resulted in the solicitation of over 145 operating, strategic, and financial bidders for the company.
Imperial convinced Sun Capital Partners to enhance its bid with a trade vendor program and a note in exchange for stalking horse status. This jump-started competitive bidding, with Sun Capital's winning bid in July resulting in values high enough to take out all secured creditors and provide an anticipated distribution to unsecured creditors of between 50% and 65%. Once the sale was completed, Kelley Drye developed a claims settlement procedure that, when combined with the claims reconciliation process and other plan features, permitted all allowed general unsecured claims to receive a 100% recovery.
Now Contessa, its financial crisis hopefully behind it, is promoting new products like World Cuisine meals for two, based on chicken, beef and shrimp, as well as its original core line of shrimp, scallops and other seafood products.
